Global Blue Group Holding AG (NYSE:GB) Q3 2025 Earnings Call Transcript

Global Blue Group Holding AG (NYSE:GB) Q3 2025 Earnings Call Transcript February 28, 2025

Jacques Stern: Good morning, I am Jacques Stern, the CEO of Global Blue, and I am today by Roxane Dufour, the CFO of Group to present you the Quarter Three of 2024-2025. But before going to the detail of the account, obviously I will walk you through the major event of last week, which has been the announcement of the acquisition by Shift4 of 100% of Global Blue. I’ll give you the main matrix of the transaction. So a purchase price of $7.50 per common shares which is 15% premium versus the closing share price, $10 for preferred shares Series A and $11.81 preferred shares Series B. This value Global Blue at an enterprise value of $2.5 billion which is a multiple of EBITDA, which is around 13 times. Obviously post closing, the Global Blue share will not be any more listed on the New York Stock Exchange.

A couple of more information on the transaction. Global Blue Board have unanimously recommended to the Global Blue shareholder to accept the tender offer. And obviously this transaction has also been approved by the Shift4 board. Closing is expected on the third quarter of 2025 after regulatory approval and other customary closing conditions and also subject to a minimum tender of 90% of the Global Blue issued and outstanding common shares and preferred shares. So this has been a big event for us and we are looking forward to the combination with Shift4, as it’s very complementary between Shift4, which is a US leader in integrated payment and commerce technology player, and Global Blue, which is mainly based, as you know, in Europe and in APAC with a strong foothold in the TFS business but also a strong position in payments.

So we are looking forward for the closing of this transaction. So, now let’s go back to the Q3 and nine months figures and for that I give the floor to Roxane.

Roxane Dufour: Thank you Jacques. I’m Roxane Dufour, the CFO of Global Blue, and I will take you through the Group financial performance for the third quarter and nine months period ended on the 31st December 2024. As a reminder, our financial year runs from April to March, so this is our Q3 and nine months announcement and all the reconciliation to the nearest IFRS metrics are included into the appendix. Let’s start with the adjusted P&L related to our third quarter. We are very pleased to report another strong quarter with significant progress across the business when comparing performance versus the same period last year. Tax Free Shopping Solutions and payments reported Sales-in-Store increased by 1 billion, an increase of 18%.

The Group delivered revenue of 131 million Euro, a 20% year-on-year increase driven by a solid performance across all divisions. Given the strong focus on variable cost optimization, the Group delivered a contribution of 101 million Euro, a 21% year-on-year increase. Then reflecting strong revenue growth and the high operating leverage profile of the business, the Group delivered an adjusted EBITDA of 52 million Euro, a 31% year-on-year increase. This resulted in an improvement in adjusted EBITDA margin of 3.4 points to 39.7% with a 56% drop-through. Finally, we recorded Group adjusted net income of 14 million, which is a 58% increase compared to the 9 million Euro last year. Turning now to the detail on the divisional performance. Starting with Tax Free Shopping Solutions, which accounted for 74% of Group revenue in the quarter.

Q&A Session

The division delivered a strong performance with completed Sales-in-Stores growth of 21% and revenue growth of 22% to 98 million Euros. As with Q2, we are reporting revenue growth ahead of Sales-in-Store growth. Important to point out here, the positive mix effect and additional revenues, which have increased the overall TFS revenue by 5%. Those growth drivers were somewhat offset by a slight negative continental mix of 2%. Then moving to contribution, here we delivered a 24% increase to 85 million Euro with a strong improvement in both Europe and Asia Pacific. TFS has a strong contribution margin of 87% with the variable cost mainly relating to airport refunding cost. Turning now to Payments. Payments accounted for 19% of Group revenue in the quarter.

Overall Payments generated a revenue of 25 million Euros representing a 17% year-on-year increase. This growth outpaced the 8% increase in sales installs and is primarily attributed to a mix effect in the acquiring business where we have observed a higher proportion of international cards compared to domestic transactions last year. These international cards have a higher margin than domestic transactions. On FX Solutions, it is important to note that we lost a significant client in Japan at the beginning of the year, which negatively impacts the comparison versus last year. Excluding this impact, the revenue growth in FX Solutions would have been 8% versus 1.8% now on a reported basis. Looking at the contribution growth of 4.5%, this is below the revenue growth due to the mix effect between business lines.

The acquiring business growing faster than FX Solutions has a low margin of 10%, which negatively impacts the overall growth of contribution. Nevertheless, 84% of the payment contribution comes from the FX Solutions, which has a strong contribution margin of 94%. Turning now to Post-Purchase Solutions. Post-Purchase Solutions accounting for 7% of Group revenue in the quarter. This business achieved a 26% year-on-year revenue growth with an 8% increase in contribution and a 55% margin. ZigZag is driving the division growth by signing new carriage contracts with lower contribution margin than the SaaS revenue stream resulting in revenue growth outpacing contribution growth. Turning now to detail on adjusted EBITDA. As I said earlier, the significant improvement in revenue together with the high operating leverage profile of the business led to a 31% increase in adjusted EBITDA in the quarter with a 56% drop through.

Looking at last year, we begin with our adjusted EBITDA, which was 40 million Euros. Then with the additional contribution of 17 million Euros coming from all the business lines, a fixed cost and foreign exchange impact of 5 million Euros, the Group delivered an adjusted EBITDA of 52 million Euros with an increase in adjusted EBITDA margin of 3.4 points to almost 40%. Turning now to detail on the nine months period. Here we are showing the adjusted P&L for the first nine months of the year and again we see the same positive trends as with the third quarter. Tax Free Shopping Solutions and Payments reported Sales-in-Store increased by 4 billion Euro, a solid increase of 21%. The Group delivered a revenue of 381 million Euro, a 20% year-on-year increase.

This is driven particularly by a strong performance in Tax Free Shopping Solutions. Again given the strong focus on viable cost of optimization, the Group delivered a contribution of 298 million Euros, a 22% year-on-year increase. Turning to adjusted EBITDA, another significant improvement here with an increase of 34% to 154 million Euro. This boosted the adjusted EBITDA margin by more than 4 points above 40% today with a strong drop through of 61%. Finally we achieved a 62% increase in Group adjusted net income to 41 million Euros versus 25 million Euro in the same period last year. Turning now to the divisional performance, starting with Tax Free Shopping. The division delivered a strong performance with an increase in completed SIS of 25% and an increase in revenue of 24%.

Tax Free Shopping Solutions delivered an impressive revenue of 291 million Euros, up 24% year-on-year. Continental Europe contributed 244 million Euros, a solid 21% increase, while Asia Pacific achieved 47 million Euros in revenue, a remarkable 43% growth driven by a strong Sales-in-Store performance. You can see here the slight difference in completed SIS growth of 25% and a revenue growth of 24%. And first, this is due to the positive trends in mix effect and some additional revenues of 5%, which is mainly offset by a negative continental mix of 6% that was particularly important in Q1. This is because Asia Pacific growing faster than Europe with Sales-in-Store today at 34% versus 28% last year and, as a reminder, the VAT rate in Asia Pacific is much lower at around 10% versus 20% in Europe.

Then we are delivering a 26% increase in contribution to 249 million Euros with a strong contribution margin of 86%. Turning now to Payments. Payments generated a revenue of 69 million Euros marking a 12% year-on-year increase, which significantly outpaced the 6% growth in Sales-in-Store. This performance was primarily driven by higher margin on treasury gains in FX Solutions and an increased number of international transactions in the acquiring business which contributed to higher overall margins, as I explained earlier, during the call. FX Solutions generated 33 million Euros in revenue, a solid 7% increase year-on-year. Acquired revenue grew to 34 million Euros reflecting a 17% increase, while the Hotel Gateway business achieved 1.3 million Euro in revenue, a 32% year-on-year increase.

We delivered a strong contribution growth across all business lines. However, the contribution growth is lower than the revenue growth due to the mix of the business in the overall contributions, as mentioned earlier. The acquiring business is growing faster than FX Solutions but it has a significantly lower contribution margin. Turning now to Post-Purchase Solutions. Here the business delivered a revenue of 22 million Euros, a 5% year-on-year increase with a contribution growth of 7%. Then turning now to adjusted EBITDA. We begin with our adjusted EBITDA which was 115 million Euro last year. Then with the additional contribution of 55 million Euros from the business lines and the fixed cost and FX impact of 60 million Euros, the Group delivered an adjusted EBITDA of 154 million Euros, a double-digit increase of 34% reflecting strong revenue growth, high operating leverage profile of the business.

Consequently, the adjusted EBITDA margin increased by just over four points and is above 40%. Turning now to the adjusted D&A, you have the breakdown of depreciation and amortization. Here the adjusted D&A has increased by 9 million Euros in the period to 36 million. This is mainly due to two factors. First, there was a 4 million increase in the amortization of capitalized software, which reflect the increase in CapEx related to software development over the last two years. Second, depreciation of leases increased by 4 million, which included 2 million Euros due to a change in accounting related to short-term leases that are now accounting according to the IFRS 16. Turning now to the net finance costs. Here we are showing an increase of 7 million Euro in net finance costs versus December last year.

This is mainly due to the increase in interest rates on the senior debt, which was 7.4% in this period this year versus 6.5 period in the same period last year. In December 24th we successfully re-priced the senior debt for the second time resulting in a reduction of the term loan interest rate margin by 50 basis points from 3.75% to 3.25% per annum. So in aggregate, over the last 12 months, we have achieved through the re-pricing a 175 basis points reduction in the term loan margin to be now at 3.25% per annum. Turning now to the next slides, here we are showing the last 12 months adjusted EBITDA over the last nine quarters and you can see here that there has been a solid acceleration in the last 12 months adjusted EBITDA we are now at 188 million Euro at the end of December 2024, up from 175 million Euro in the previous quarter.

Turning now to the cash flow. After an adjusted EBITDA of 154 million Euros, the level of CapEx was 37 million Euros in the period and this is essentially related to technology development. So the Group delivered a solid improvement in adjusted EBITDA less CapEx to 117 million Euros, a year-on-year improvement of 31 million Euros. In parallel reflecting the normalization of working capital, the pre-tax unleveraged free cash flow reached 123 million Euros versus 86 million Euros last year. Finally there has been a decrease in net debt of 34 million Euros and I will cover this on the next slide. As December 31, 2024 the Group net debt reached 488 million Euros consisting of gross financial debt of 610 million Euros and cash and cash equivalents of 122 million Euros resulting in a net leverage ratio of 2.6 times, a significant improvement from the 3.6 times in December last year.

Turning now to the key takeaways. First we are pleased to report a very strong performance in the first nine months with a significant 20% increase in revenue reaching 381 million Euro. Second, reflecting the strong revenue growth and high operating leverage profile of the business, we delivered a strong improvement in adjusted EBITDA to 154 million Euros, which is an increase of 34% of that reported last year with a 61% of drop-through. Then if we look at the last 12 months adjusted EBITDA, there has been a continuous improvement over the last two years reaching now 188 million Euro, up from the 175 million Euro at the end of the last quarter. Finally, we delivered a strong improvement in the net leverage ratio to 2.6 times versus 3.6 last year and we are approaching the long term target of being below 2.5 times.

So this concludes the financial sections and I will now hand over to Jacques for the guidance.

Jacques Stern: Thank you, Roxane. So, last slide of this presentation related to the short-term guidance for the full year 2024-2025. So, we reiterate our guidance of 185 million to 205 million but we are expecting to achieve it toward the top half of the range based on the improvement of the last 12 months adjusted EBITDA over the last three quarters. With that in mind, time for me to conclude. So obviously the most important things was this announcement of the acquisition of Global Blue by Shift4 last week and we are looking forward for the closing in Q3 of the calendar year 2025. Obviously Roxane have shown you the strong performance on nine months in terms of revenue, in terms of EBITDA, in terms of margin, in terms of drop-through and, with that in mind, as I was mentioning a few minutes ago, we are pleased to reiterate the full year guidance for the year from 185 million to 205 million in terms of adjusted EBITDA and we are expecting to achieve this guidance toward the top half of the range.

Thank you very much for the listening. Bye.

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